Under Rep. Archer's bill, individuals would receive 28 new taxpayer rights. The basic groundwork for the legislation was laid by a congressional commission that spent a year studying the IRS and its problems. (For details on the commission's recommendations, see "Tax Talk," October 1997.)
"While most people at the IRS follow the rules and collect the nation's revenues the way they're supposed to, there are too many instances in which taxpayers are denied their fundamental rights, money is coerced from people who do not owe, and the defenseless become targets for IRS audits," Archer declared during a national radio address in October.
To combat these problems, the legislation would shift the burden of proof in tax lawsuits away from taxpayers and onto the IRS. This provision aims to address the perception that current law considers taxpayers guilty until proved innocent when involved in an IRS dispute.
Taxpayers would still be required to produce documents upon demand, provide access to witnesses and cooperate with the IRS--crucial provisions, says Alexander. "The problem of shifting the burden of proof without those requirements is that it would encourage taxpayers to deliberately avoid keeping records," says Alexander. "They could claim they made larger deductible expenditures than they did, and there would be no way for the IRS to disprove them."
The measure would also create an 11-member IRS oversight board that would hold the IRS accountable for change at the agency. The president would select eight private citizens for the board; the remaining board members would be the treasury secretary, the IRS commissioner and a union representative for IRS employees.
As envisioned by Archer, the new board would review and approve the IRS' annual strategic plans; review the agency's operations, including plans for modernization, agent training and education; review the IRS commissioner's selection, evaluation and compensation of senior managers; and review and approve major IRS reorganization plans. While the board would not have a role in establishing tax policy, it would approve the agency's annual budget request. The president could still submit a different request if he wished to do so. In addition, the board would not have the authority to receive confidential taxpayer return information.
The Clinton Administration opposes the creation of an independent board because it would take power away from the Treasury, and it will probably try to water down some of the board's proposed powers when the Senate considers the measure.
The legislation would also allow taxpayers to sue the agency for damages caused by IRS negligence and make it easier to recover legal costs when the IRS wrongly accuses a taxpayer. In addition, it would make more cases eligible for resolution in a tax version of small claims court and provide financing for low-income tax clinics to help needy Americans who are in a dispute with the IRS. The measure would also expand the ability of "innocent spouses," often divorced women, to be relieved from liability for additional taxes the IRS determines are owed on a joint return filed during the couple's marriage.
Even if the measure is signed into law, Republican lawmakers are expected to keep the heat on by moving the debate from the IRS' internal problems to simplifying the tax code. The focus is likely to be on whether a flat tax or a national sales tax should replace our current federal tax system.